The circadian clock in the suprachiasmatic nucleus (SCN) of the hypothalamus organizes behavioral rhythms, such as the sleep–wake cycle, on a near 24-h time base and synchronizes them to environmental day and night. Light information is transmitted to the SCN by direct retinal projections via the retinohypothalamic tract (RHT). Both glutamate (Glu) and pituitary adenylyl cyclase-activating peptide (PACAP) are localized within the RHT. Whereas Glu is an established mediator of light entrainment, the role of PACAP is unknown. To understand the functional significance of this colocalization, we assessed the effects of nocturnal Glu and PACAP on phasing of the circadian rhythm of neuronal firing in slices of rat SCN. When coadministered, PACAP blocked the phase advance normally induced by Glu during late night. Surprisingly, blocking PACAP neurotransmission, with either PACAP6–38, a specific PACAP receptor antagonist, or anti-PACAP antibodies, augmented the Glu-induced phase advance. Blocking PACAP in vivo also potentiated the light-induced phase advance of the rhythm of hamster wheel-running activity. Conversely, PACAP enhanced the Glu-induced delay in the early night, whereas PACAP6–38 inhibited it. These results reveal that PACAP is a significant component of the Glu-mediated light-entrainment pathway. When Glu activates the system, PACAP receptor-mediated processes can provide gain control that generates graded phase shifts. The relative strengths of the Glu and PACAP signals together may encode the amplitude of adaptive circadian behavioral responses to the natural range of intensities of nocturnal light.